You’re the Boss Blog: A Social Business Strikes a Deal With Big Tobacco

Sustainable Profits

The challenges of a waste-recycling business.

A few months ago I wrote a blog post about TerraCycle’s intention to create a national recycling program for all waste, even including cigarette butts. As our programs have grown, we have had frequent internal debates about what kinds of companies we want to partner with to help them make their waste recyclable (which in turn makes their products greener).

We have come to understand that every industry has its issues. For example, the food industry has many debates around the use of refined sugar, corn and soy in its products. And the garment industry has issues involving the use of leather and fur, and the cosmetics industry has challenges concerning animal testing, which some retailers require. The list goes on, and I am becoming increasingly confident that there really is no perfect product, which we should all consider when buying stuff.

A month after that post, in mid-May, we introduced the a cigarette-recycling program in Canada. It has been a success with more than 400 collection locations registered and more than 180,000 butts already collected. Somewhat to my surprise, several Canadian media outlets wrote positively about the program. Already, if you search “cigarette recycling,” we rank prominently in the top 10 links that come up.

And now, we’ve started a similar program in the United States along with Santa Fe Tobacco, which is owned by R.J. Reynolds. We had more than 220 collection locations sign up in the first 24 hours and more than 400 within a few days.

Consumers can create a collection location at no cost by signing up a home or business on our Web site. We pay the shipping, and for each pound of cigarette waste collected we donate $1 to Keep America Beautiful. We also recently introduced a pilot program in Spain with British American Tobacco. And we’ve received confirmation of interest from various tobacco companies in other countries that are interested in creating similar programs.

The waste consumers send us is shredded and separated. The organic material is composted (ash, tobacco, and paper) and the inorganic (the cellulose acetate filter, the nonboard packaging components) is made into plastic products, like a plastic pallet.

There is no technical reason why cigarette butts, like all other traditionally nonrecyclable waste, cannot be recycled. It simply costs more to recycle cigarette waste than the output is worth, and recycling companies have chosen not to get into the business. Instead they focus on things like aluminum cans and paper, which have good volumes and strong economics.

In our case, the economics work because the cigarette companies finance the difference by sponsoring our brigades. It’s sort of like a voluntary national bottle bill for cigarettes or voluntary extended product responsibility. TerraCycle tries to make money on both ends. Coming in at $15 million in sales this year, however, we’re still just modestly profitable. Our hope is that as our collection volumes rise, our profits will, too.

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Article source: http://boss.blogs.nytimes.com/2012/12/06/a-social-business-strikes-a-deal-with-big-tobacco/?partner=rss&emc=rss